QUESTION 3(a) Explain the following:O The difference between a defined benefit plan and a defined contribution plan.(i) “Current service cost" and "Contributions paid".(b) Moore operates a defined benefit scheme for its employecs but has yet to record anything forthe current year except to expense the cash contributions which were $18 million. Theopening position was a net liability of $45 million which is included in the non-currentliabilities of Moore in its draft financial statements. Current service costs for the year were$15 million and interest rates on good quality corporate bonds fell from 8% at the start of theyear to 6% by 31 March 20X8. In addition, a payment of $9 million was made out of the cashof the pension scheme in relation to employees who left the scheme. The reduction in thepension scheme liability as a result of the curtailment was $12 million. The actuary hasassessed that the scheme is in deficit by $51 million as at 31 March 20X8.RequiredCalculate the gain/loss on re-measurement of the defined benefit pension net liability of Mooreas at 31 March 20Xx8, and state how this should be treated

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(a) Explain the following: O The difference between a defined benefit plan and a defined contribution plan. (i) "Current service cost" and "Contributions paid".

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 2DQ

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